Term
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Definition
| plan or forecast acquisition and uses of resources; they are used in planning, directing, and control activities |
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Term
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Definition
| comprehensive set of all budgets for operations |
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Definition
| prepare first as base from which other budgets are generated |
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| production budget (units) |
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Definition
| units needed for sales forecast + desired ending inventory = total units needed - units in beginning inventory = units to produce |
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| purchases (materials) budget |
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Definition
| quantity of DM needed for production + desired DM ending inventory = total quantity of DM needed - DM beginning inventory = quantity of DM to purchase |
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Definition
| units to be produced x DL hours per unit = total DL hours required x DL cost per hour = total direct labor cost |
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Term
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Definition
| budgets for areas other than manufacturing costs (depreciation may be in this budget, it is a non-cash expense) |
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Term
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Definition
| beginning cash balance + budgeted cash collections = cash available - budgeted cash payments = ending cash balance before financing |
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| debit/credit card transactions |
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Definition
| must reduce cash collections budget for transaction fees |
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Definition
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Term
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Definition
| must justify each dollar included in budget |
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Term
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Definition
| reviews and approves final budget; should include cross section of managers |
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Term
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Definition
| managers may overestimate expenses and underestimate revenues in budget numbers |
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Term
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Definition
| "pushing" down management decisions to lower management levels |
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Term
| responsibility accounting |
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Definition
| managers should be measured based on information and activities they have control over (cost center, revenue center, profit center, and investment center) |
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Term
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Definition
| manager must control costs, uses performance report for comparing actual costs versus budgeted costs |
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Term
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Definition
| manager must generate sales, uses performance report for comparing actual revenue versus budgeted revenue |
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Term
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Definition
| manager must earn profits through generating sales and controlling costs, uses performance report comparing actual revenue and costs versus budgeted revenue and costs |
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Term
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Definition
| manager must earn profits and manage division's invested capital |
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Term
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Definition
| evaluates performance of company (e.g. are the goals of the company being met?) |
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Term
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Definition
| compares actual results with flexible budget, eliminates variances due to volume differences, must be able to identify variances as either favorable or unfavorable |
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Term
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Definition
| review items which appear "out of line", normally do not investigate small variances |
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Term
| return on investment (ROI) |
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Definition
sales margin x capital turnover
sales margin = operating income / sales
capital turnover = sales / total assets
operating income / total assets |
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Term
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Definition
| operating income/sales, capital turnover = sales/total assets |
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Term
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Definition
| operating income - (target rate of return x total assets) |
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Term
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Definition
| price that is set on an exchange of a product or service between two segments within the same company |
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Term
| general transfer price rule |
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Definition
| minimum price set = outlay costs + opportunity costs |
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Term
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Definition
| budget does not change with changes in sales volume |
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Term
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Definition
| budget does change with changes in sales volume |
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Term
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Definition
| difference between master budget and a flexible budget at actual output |
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Definition
| difference between flexible budget and actual results |
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Term
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Definition
| integrated set of performance measurements; performance measures include financial, customer related, internal business process, and learning and growth |
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Term
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Definition
| expected costs for one unit |
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Term
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Definition
| DM price variance, DM quantity variance, DL rate variance, DL efficiency variance, variable OH rate variance, variable OH efficiency variance |
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Term
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Definition
what was paid for material versus a standard
actual quantity purchased x (actual price - standard price) |
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Term
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Definition
what was used in material versus a standard
standard price x (actual quantity used - standard quantity) |
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Term
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Definition
what employees were actually paid versus the standard
actual hours used x (actual rate - standard rate) |
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Term
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Definition
how many hours actually put into work versus standard hours
standard rate x (actual hours - standard hours) |
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Term
| variable OH rate variance |
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Definition
| actual hours x (actual rate - standard rate) |
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Term
| variable OH efficiency variance |
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Definition
| standard rate x (actual hours - standard hours) |
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Term
| fixed OH spending variance |
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Definition
| actual fixed overhead - budgeted fixed overhead |
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Term
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Definition
operating income - minimum acceptable income
operating income - (target rate of return x total assets) |
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Term
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Definition
| key performance indicator: sales revenue growth, gross margin growth, net operating income growth, ROI, EPS growth |
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Term
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Definition
| key performance indicator: customer satisfaction ratings, % of market share, increase in # of repeat customers |
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Term
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Definition
| key performance indicator: # of new products developed, product quality (defect rate), manufacturing cycle time, # of warranty claims, average repair time |
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Definition
| key performance indicator: employee satisfaction, employee turnover, hours of employee training, # of employee suggestions that are implemented |
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Term
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Definition
| developing objectives and goals |
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| coordination & commnication |
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Definition
| day to day management decisions |
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Term
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Definition
| determining whether objectives and goals are met, comparing actual results to budget |
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Term
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Definition
budgets needed to run the daily operations of the company and may include:
(in order) sales budget, production budget, direct material budget, direct labor budget, manufacturing overhead budget, operating expenses budget, budgeted income statement |
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Term
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Definition
project the collection and payments of cash and may include:
1. capital expenditure budget
2. cash collections, cash payments, and combined cash budget
3. budgeted balance sheet |
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